joe, use checkmend..it'll cost you £2 for a single check. It'll let you know if it is lost/stolen/written off ...if it is listed as stolen then you are stuck. the owner(hopefully the person you purchased from) needs to have the phone unblocked. It is currently illegal in the UK to "unblock" a phone apart from through your provider... if the phone worked and then stopped after 1 week, and you know who you purchased from, i'd ring up the carrier/insurance and report them for fraud... the only other option is to sell overseas..plenty on ebay/gumtree doing just that. You could try to fix the water damage..you may just resurrect your wifes phone and then she'll be all happy again (again)
ps it is also illegal to change you imei.....